The International Monetary Fund (IMF) projects that public debt levels are set to reach $100 trillion this year, driven by China and the US, even before global finance chiefs fly into Washington over the next few days, urging them in advance to tighten their belts.
IMF Managing Director Kristalina Georgieva, in a speech on Thursday, stressed how that mountain of borrowing is weighing on the world.
“Our forecasts point to an unforgiving combination of low growth and high debt — a difficult future,” she said.
“Governments must work to reduce debt and rebuild buffers for the next shock — which will surely come, and maybe sooner than we expect,” she cautioned.
The warning note comes as ministers and central bankers gather in the US capital city for the Fund’s annual meeting, commencing on Monday, Bloomberg reported.
The meeting also comes two weeks ahead of a potentially era-defining US election, and with the world’s recent inflation crisis barely behind it.
The IMF has already pointed to some of the themes it hopes to press home with a barrage of projections and studies on the global economy in the coming days.
The IMF’s Fiscal Monitor on Wednesday will feature a warning that public debt levels are set to reach $100 trillion this year, driven by China and the US
Some finance ministers may get further reminders even before the week is over.
UK Chancellor of the Exchequer Rachel Reeves has already faced an IMF warning of the risk of a market backlash if debt doesn’t stabilise. Tuesday marks the last release of public finance data before her October 30 budget.
The UK tax office is taking a tougher approach to clawing back debts, insolvency specialists say, a bid to squeeze £5 billion ($6.5 billion) in extra revenue.
Meanwhile, Moody’s Ratings has slated Friday for a possible report on France, which faces intense investor scrutiny at present.
With its assessment one step higher than major competitors, markets will watch for any cut in the outlook.
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